It’s just about time for your annual re-acquaintance with the Canada Revenue Agency (CRA). Circle Monday, April 30th to get your return and tax payment in, though if you or your spouse runs a business, the return itself may not be due until Friday, June 15th.
Per usual, there are some new opportunities and obligations this season. Below is a very brief summary of some key federal tax items to look out for, and an outline of some CRA services that can make the reporting relationship as seamless and painless as possible.
Opportunities
Children’s arts tax credit
This is a complement to the existing Children’s Fitness Tax Credit. Parents may obtain a tax credit worth up to $75 for each child under 16 enrolled in a qualifying program such as arts instruction, cultural knowledge or nature training. An additional $75 worth of tax credit may be available if the child is under 18 and qualifies for the disability amount.
Volunteer firefighters tax credit
Volunteer firefighters may be able to reduce their tax bill by as much as $450 if they have completed at least 200 hours of eligible volunteer time. If that person has received and claimed an income exemption for certain payments made with respect to the volunteer firefighter duties, he or she may be precluded from claiming this credit.
Allowable amount of medical expenses for other dependants
The $10,000 limit per eligible dependant has been removed. Eligible dependants in relation to either spouse may include a child, grandchild, parent, grandparent, brother, sister, aunt, uncle, niece, or nephew who was a resident of Canada at any time in the year.
Flow-through shares
Under a flow-through share agreement, an investor may be entitled to claim tax credits that have been renounced by an originally entitled claimant. Eligibility for such treatment is generally subject to annual renewal by the government. In the 2011 Federal Budget, eligibility for the mineral exploration tax credit was extended to flow-through share agreements entered into before April 1, 2012.
Obligations
Donation of flow-through shares
The inclusion rate for deemed capital gains is 0% for a broad list of marketable securities when donated in-kind to a registered charity. As announced in the 2011 Federal Budget, this same treatment will not continue for the donation of certain flow-through share properties made after March 21, 2011. A prescribed formula is now used to calculate if and to what extent a 50% inclusion rate applies to such deemed capital gains.
Split income of a child under 18
The tax on split income, informally known as the ‘kiddie tax’, was extended in the 2011 Federal Budget. After March 21, 2011, a capital gain from the disposition of shares to which this split income tax would have applied (had there been a dividend) will now be deemed to apply to such a transaction.
Ready to file?
CRA website carousel
On the CRA website www.cra-arc.gc.ca, scroll through the front carousel until you get to the image of the clipboard with the linked headline, “These five steps will help you get the most out of your 2011 income tax return.” This will take you to the hub of 2011 filing information on the site, including further items and greater detail beyond the brief summary provided in this article.
My Account
This CRA service offering was featured in detail in our April 2010 Tax & Estate matters article. Basically it’s their 21/7 (allowing for maintenance time I guess) portal for tracking your personal tax and benefit information.
Recently announced, you can now view T4 and T4A information in My Account.
If you’re not yet registered for My Account and want to use it as part of this year’s filing exercise, you should get on it right away. The process cannot be done entirely online, in that CRA mails out an interim password that must then be used to activate the account. The expectation is that you will receive this within 5 days (Canada or the US), but if you have moved recently (as I had when I activated mine a few years back), then it could take longer to iron out.
Netfile
As promoted by CRA, this is the quick, easy and secure way to get your tax return filed – and to get your refund faster. A four-digit Netfile access code is printed on the information sheet of your T1 personal income tax return package.
Tax preparation software and web services that are compatible with Netfile will be marked as “NETFILE-certified”. Be aware that this merely indicates technical compatibility, and is not an endorsement of the product itself.